"Beijing prefers to use reforms rather than stimulus to sustain growth," he said.

"While reforms can boost long-term growth prospects, they will have a limited impact in the short term. As such we expect slightly weaker growth in 2Q."

HSBC has cut its 2013 growth forecast to 7.4 percent from 8.2 percent and its 2014 outlook to 7.4 percent from 8.4 percent.

Several other banks have also cut their outlooks; Barclays Capital says it expects China's annual economic growth to slow to 7.5 percent in the second quarter, and 7.4 per cent annually.

Citi cut its outlook for several emerging markets including China, it believes China's policymakers are now targeting an annual growth rate of between 7 per cent to 7.5 per cent and have lowered their outlook accordingly for Q2, from 7.8 to 7.6 per cent.

HSBC says the monthly reports are the earliest available indicator of conditions in China's vast manufacturing sector.

The official data is due next week.

There was strong negative reaction to the data from Australian equity and currency traders.

The Australian dollar dropped to a fresh 33-month low of 92.4 US cents.